Picking up cues from this trend, advisors may want to think of how they can convey to prospective clients how tailored and specific their services are. This may involve highlighting how personal and interactive their services are. Advisors may also want to consider assessing their online portals, including dashboards, to ensure that they are problem solving solutions.
As 2023 ends, it may be that luxury brands are showing a lapse in both profit as well as sway on consumers. For financial advisors who look to track luxury brands in their marketing and advertising approaches, this could be an important trend to track. And it isn’t all negative.
It may seem like luxury brands, like Louis Vuitton and Gucci, are everywhere. Logos and labels bombard the average social media user and city dweller. But look again, that trend may have run its course. What’s fascinating is that the end may just as predicted.
Recently, it was reported that luxury brands are losing their appeal to consumers as continued inflation cuts into shopping budgets. LVMH, the parent company of Louis Vuitton reported reduced quarterly results (9% growth down 11% from 20%). Similar growth stumbles were reported for LVMH’s other brands, Moet, and Hennessy. The rate of inflation may have peaked, but inflation occurring at any rate, month over month or quarter over quarter, still results in less buying power for the same dollar.
The simple answer for the change in trend is that consumers have run through their excess savings. JP Morgan predicted that the excess savings, once at $2.1 trillion in the middle of 2021 would dry up during 2022 and be fully depleted by the third quarter of 2023, right in time for the holiday shopping season. The more complicated answer involves a move towards so-called quiet luxury, a trend along the lines of minimalism. Back in 2017, discussed the upside to minimalism for investors. Back then, we said that minimalism and a new frugality “impact directly on the funds available for savings and retirement. In fact, both trends are partially motivated by a want to ensure a stable financial picture and one that includes a healthy retirement.”[1] Quiet luxury doesn’t have the same focus on frugality and saving, but as a trend impacting the younger millennials, those who need to get serious about their retirement saving, it has some important details for financial advisors.
Quiet luxury encapsulates lushness and minimalism: think, tailored white cashmere sweaters, hand crafted leather goods, soaps milled by hand. It lacks the austerity of the minimalism of the mid-2010s and replaces it with excelling at meeting needs on a highly specific level. One brand even summed this up as being extremely customer centric. Having custom details that fit the precise needs of a customer make for an item that fits quiet luxury.
To hit that note, market research on customer lifestyles and their specific needs is necessary. It may seem like “comfort” would fulfill the bill for a trend based on luxury, but it’s more specific than that. For example, if the customer is a professional woman with multiple children, then an emphasis on time-solving or multi-tasking products would fit the bill. A designer described creating small corners in a restaurant that allow for conversation as quiet luxury, since it allows for moments of connection.
Sustainability is another important aspect of quiet luxury. Those seeking it want a product that will fit their needs for multiple years, so they don’t have to adjust to a new system or product in the future. Sustainability extends to physical products, like shoes and accessories, as well as the process of engaging with a service or product.
Financial advisors tracking this trend may want to consider how to reach the younger millennials who are influenced by quiet luxury. Picking up cues from this trend, advisors may want to think of how they can convey to prospective clients how tailored and specific their services are. This may involve highlighting how personal and interactive their services are. Advisors may also want to consider assessing their online portals, including dashboards, to ensure that they are problem solving solutions. Along the same lines, ensuring that their dashboards are sustainable – e.g., they don’t change too frequently so that clients have to relearn how to find key information – may also be of use.
[1] https://www.bcgbenefits.com/blog/minimalism
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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